SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended 26 October 2004
BP p.l.c.
(Translation of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F
--------------- ----------------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No |X|
--------------- ----------------
BP p.l.c.
Group Results
3rd Quarter 2004
London 26 October 2004
FOR IMMEDIATE RELEASE
RECORD NINE-MONTHS RESULT
---------------------------------------------------------------------------
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 $ million 2004 2003 %
======================= ====================
Replacement cost profit
2,260 3,434 3,456 for the period (a) 11,060 8,216
498 474 481 Acquisition amortization(b) 1,502 1,755
----------------------- --------------------
2,758 3,908 3,937 Pro forma result 12,562 9,971 26
======================= ====================
7.76 9.93 9.99 - per ordinary share (pence) 31.53 27.90 13
12.50 17.85 18.17 - per ordinary share (cents) 57.38 44.92 28
0.75 1.07 1.09 - per ADS (dollars) 3.44 2.70
======================= ====================
o BP's third quarter pro forma result was $3,937 million, compared with
$2,758 million a year ago, an increase of 43%. For the nine months the
result was $12,562 million compared with $9,971 million, up 26%.
Replacement cost profit for the third quarter and nine months was
$3,456 million and $11,060 million respectively, compared with
$2,260 million and $8,216 million a year ago.
o The third quarter result includes net exceptional and non-operating
charges of $401 million compared with a net charge of $217 million in
the third quarter of 2003.
o The third quarter trading environment was generally stronger than a
year ago, with higher oil and gas realizations and higher refining and
chemicals margins.
o Net cash inflow for the quarter was $1.7 billion and net cash inflow
for the nine months was $7.0 billion, compared with an outflow of
$2.4 billion and an inflow of $3.2 billion a year ago. Net cash inflow
from operating activities for the quarter and nine months was
$6.9 billion and $21.5 billion respectively, compared with $4.9 billion
and $18.2 billion a year ago.
o The pro forma ratio of net debt to net debt plus equity was 22% at the
end of the quarter.
o Return on average capital employed for the quarter and nine months
respectively, on a pro forma basis, was 19.5% and 20.8%, compared with
15.8% and 19.2% a year ago. The cash return for the quarter was 36%
compared with 31% a year ago, and for the nine months was 34% the same
as a year ago.
o The quarterly dividend was 7.10 cents per share ($0.426 per ADS). This
compares with 6.50 cents per share a year ago. For the nine months the
dividend showed an increase of 8.8%. In sterling terms, the quarterly
dividend is 3.910 pence per share compared with 3.857 pence a year ago;
for the nine months the dividend showed a decrease of 2.2%. During the
first nine months, the company repurchased for cancellation 621 million
of its own shares, at a cost of $5.5 billion. The increase in the
dividend per share reflects the reduction in the number of shares
outstanding due to the share buyback programme which allows the
company's dividend payments to be allocated across a smaller equity
base.
BP Group Chief Executive, Lord Browne, said:
"This has been another strong performance against the backdrop of
strong global demand. We are on track against our targets of controlled
investment for growth and using additional free cash flow to fund a
significant level of share buybacks. The plans to prepare the Olefins
and Derivatives business for disposal are on track."
The pro forma result has been derived from the group's reported UK GAAP
accounting information but is not in itself a recognized UK or US GAAP measure.
This financial performance information and measures derived therefrom, shown
above and elsewhere in the document, are provided in order to enable investors
to evaluate better BP's performance against that of its competitors.
(a) Replacement cost profit for the period includes the net profit or loss
on the sale of fixed assets and businesses or termination of
operations.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon
the ARCO and Burmah Castrol acquisitions. The results for the first
nine months of 2003 and 2004 include accelerated depreciation of the
revaluation adjustment in respect of the impairment of former ARCO
assets.
Summary Third Quarter Results
Exploration and Production's record third quarter result was up 30% on a year
ago, reflecting higher liquids and gas realizations combined with increased
volumes and the changing composition of production primarily resulting from the
TNK-BP acquisition.
The Refining and Marketing result increased 89% compared with a year ago,
reflecting stronger realized refining margins, supported by strong product
demand and the impact of industry-wide refinery maintenance.
The Petrochemicals result decreased by 10% compared with the second quarter.
This reflects higher margins and lower fixed costs more than offset by higher
non-operating and exceptional charges.
In Gas, Power and Renewables, the result increased compared with a year ago.
This reflects improved margins in the NGL and Solar businesses and higher
exceptional gains, offset partly by weaker gas marketing and trading margins.
Interest and other finance expense for the quarter was $235 million compared
with $221 million for the prior quarter. The increase relates primarily to a
rise in interest rates.
The pro forma effective tax rate on replacement cost profit was 34.6%.
Capital expenditure was $3.4 billion for the quarter and there were no
significant acquisitions. Disposal proceeds for the quarter were $0.58 billion.
Net debt at the end of the quarter was $18.6 billion. The pro forma ratio of net
debt to net debt plus equity was 22% at the end of the quarter compared with 23%
at the end of the second quarter.
During the third quarter, shares to the value of $1.25 billion were issued to
Alfa Group and Access Renova (AAR) as the first instalment of the deferred
consideration for our investment in TNK-BP. The company also repurchased for
cancellation 241.5 million of its own shares, at a cost of $2.25 billion.
---------
The commentaries above and following are based on the pro forma replacement cost
results.
TNK-BP operational and financial information has been estimated.
The financial information for 2003 has been restated to reflect (a) the transfer
of natural gas liquids (NGLs) operations from the Exploration and Production
segment to Gas, Power and Renewables on 1 January 2004; (b) the adoption by the
group of Financial Reporting Standard No. 17 'Retirement Benefits' (FRS 17) with
effect from 1 January 2004; and (c) the adoption by the group of Urgent Issues
Task Force Abstract No. 38 'Accounting for ESOP Trusts' with effect from 1
January 2004. For further information see Note 1.
Exceptional and Non-Operating Items
3Q 2004
------------------------------
Exceptional Non-Operating
$ million Items Items and UPIS(a)
------------------------------
Exploration and Production 23 (137)
Refining and Marketing (17) (206)
Petrochemicals (38) (58)
Gas, Power and Renewables 16 -
Other businesses and corporate 1 (244)
------------------------------
(15) (645)
Taxation 33 226(b)
------------------------------
18 (419)
==============================
(a) Charges for environmental and other provisions have been classified as
non-operating items and prior periods restated to conform with this
treatment.
(b) Tax on non-operating items and Unrealized Profit in Stock (UPIS) is
calculated using the pro forma effective tax rate on replacement cost
profit, excluding exceptional items, of 35%.
Reconciliation of Reported Results to Pro Forma Results
Pro Forma Result ----- 3Q 2004 ----- Pro Forma Result
-------------------
3Q 2Q 3Q Acq. Reported Nine Months
2003 2004 2004 Amort+ Earnings* $ million 2004 2003
======================================= ==============
Exploration and
3,959 4,558 5,144 261 4,883 Production 14,270 12,958
Refining and
687 1,562 1,301 220 1,081 Marketing 3,804 2,613
84 208 188 - 188 Petrochemicals 371 527
Gas, Power
127 216 130 - 130 and Renewables 544 484
Other businesses
(330) (164) (424) - (424) and corporate 541 (649)
--------------------------------------- --------------
RC profit before
4,527 6,380 6,339 481 5,858 interest and tax 19,530 15,933
---------------------------------------- --------------
Interest and Other
(298) (221) (235) - (235) finance expense (684) (879)
(1,428)(2,199)(2,109) - (2,109) Taxation (6,130) (4,954)
(43) (52) (58) - (58) MSI (154) (129)
---------------------------------------- --------------
2,758 3,908 3,937 481 3,456 RC profit 12,562 9,971
---------------------------------------- --------------
1,027 Stock holding gains (losses)
-----
4,483 HC profit
=====
* Replacement cost profit for the period includes the net profit or loss on
the sale of fixed assets and businesses or termination of operations.
+ Acquisition amortization is depreciation and amortization relating to the
fixed asset revaluation adjustments and goodwill consequent upon the ARCO
and Burmah Castrol acquisitions. The results for the first nine months of
2003 and 2004 include accelerated depreciation of the revaluation
adjustment in respect of the impairment of former ARCO assets.
Operating Results and Per Share Amounts
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
================================ =====================
Replacement cost
Profit before
4,029 5,906 5,858 interest and tax ($m) 18,028 14,178
-------------------------------- ---------------------
Results for the
period ($m)
2,758 3,908 3,937 Pro forma result 12,562 9,971
2,260 3,434 3,456 Replacement cost profit 11,060 8,216
2,344 3,896 4,483 Historical cost profit 13,197 8,148
-------------------------------- ---------------------
Shares in issue at
22,107,715 21,789,115 21,713,966 period end (thousand)21,713,966 22,107,715
- ADS equivalent
3,684,619 3,631,519 3,618,994 (thousand) 3,618,994 3,684,619
Average number of
shares outstanding
22,092,365 21,906,318 21,683,963 (thousand) 21,891,936 22,193,403
- ADS equivalent
3,682,061 3,651,053 3,613,994 (thousand) 3,648,656 3,698,901
Per ordinary share
(cents)
12.50 17.85 18.17 Pro forma result 57.38 44.92
RC profit
10.25 15.68 15.96 for the period 50.52 37.02
HC profit
10.62 17.80 20.67 for the period 60.28 36.71
Per ADS (cents)
75.00 107.10 109.02 Pro forma result 344.28 269.52
RC profit
61.50 94.08 95.76 for the period 303.12 222.12
HC profit
63.72 106.80 124.02 for the period 361.68 220.26
-------------------------------- ---------------------
Exploration and Production
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
================= ==============
Replacement cost profit
3,666 4,302 4,883 before interest and tax 13,427 11,818
293 256 261 Acquisition amortization 843 1,140
----------------- --------------
Pro forma replacement cost result
3,959 4,558 5,144 before interest and tax 14,270 12,958
================= ==============
Results include:
- (160) (7) Asset write-downs/impairment (290) (49)
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - (102)
- - (35) Other (35) -
15 (87) (95) Unrealized profit in stock (UPIS) (248) (4)
----------------- --------------
15 (247) (137) Total non-operating items and UPIS (573) (155)
196 (114) 23 Exceptional items 120 962
================= ==============
Total non-operating items, UPIS
211 (361) (114) and exceptional items (453) 807
================= ==============
136 108 135 Exploration expense 379 349
Of which:
75 22 34 Exploration expenditure written off 123 168
----------------- --------------
Production (Net of Royalties)
1,852 2,321 2,298 Crude oil (mb/d) 2,320 1,798
202 197 181 Natural gas liquids (mb/d) 190 211
2,054 2,518 2,479 Total liquids (mb/d)(a) 2,510 2,009
8,401 8,425 8,275 Natural gas (mmcf/d) 8,433 8,617
3,502 3,971 3,906 Total hydrocarbons (mboe/d)(b) 3,964 3,495
================= ==============
Average realizations
27.72 34.47 39.43 Crude oil ($/bbl) 34.93 28.25
19.39 23.71 28.77 Natural gas liquids ($/bbl) 25.13 18.96
26.79 33.27 38.29 Total liquids ($/bbl) 33.89 27.24
3.08 3.68 3.66 Natural gas ($/mcf) 3.71 3.46
22.58 27.66 30.08 Total hydrocarbons ($/bbl) 28.03 23.88
================= ==============
Average oil marker prices
($/bbl)
28.38 35.32 41.54 Brent 36.31 28.64
30.19 38.28 43.88 West Texas Intermediate 39.18 31.08
28.83 36.99 41.82 Alaska North Slope US West Coast 37.70 29.69
================= ==============
Average natural gas marker prices
4.97 6.00 5.75 Henry Hub gas price ($/mmbtu)(c) 5.81 5.65
UK Gas - National
15.08 20.70 23.63 Balancing Point (p/therm) 22.98 17.92
================= ==============
(a) Crude oil and natural gas liquids.
(b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet =
1 million barrels.
(c) Henry Hub First of the Month Index.
Exploration and Production
The pro forma replacement cost result before interest and tax for the third
quarter was $5,144 million, a record result, up 30% from the third quarter of
2003. The primary drivers for the change are the higher realizations in both
liquids and gas combined with increased volumes and the changing composition of
production primarily resulting from the TNK-BP acquisition. This quarter further
benefited from an exceptional gain of $23 million. The corresponding quarter in
2003 contained exceptional gains of $196 million.
Included in the results for the quarter was a non-operating charge totalling $42
million. This charge results from impairments associated with the write-off of
the partner operated Temsah platform in Egypt following the blow-out, revisions
to impairment estimates made in the prior quarter and a charge taken for Alaskan
tankers no longer required.
The third quarter result also included a charge of $95 million, reflecting an
increase in the provision for Unrealized Profit in Stock (UPIS), which removes
the upstream margin from downstream inventories. This compares with a credit of
$15 million in the equivalent quarter of last year.
The nine months result of $14,270 million is a record, up $1,312 million on a
year ago, reflecting the higher realizations combined with increased volumes and
the changing composition of production primarily resulting from the TNK-BP
acquisition.
Production for the quarter was up over 11% to 3,906 mboe/d compared with a year
ago. This reflects the inclusion of TNK-BP and the continuing ramp-up of
production in the New Profit Centres, partly offset by planned maintenance in
the North Sea and Alaska, the operational impact of Hurricane Ivan in the Gulf
of Mexico and the blow-out at partner operated Temsah in Egypt.
Projects in the New Profit Centres remain on track. In the quarter Kizomba A
started up in Angola, and in Australia, the North West Shelf Train 4 LNG plant
was brought on line and first liftings have taken place.
In the third quarter, we had further exploration success with the Pela Lache-1
prospect offshore Sakhalin Island in Russia.
During the quarter, we completed our divestments of various properties in the
Gulf of Mexico Shelf and of our interests in Offshore North Sinai in Egypt,
resulting in total exceptional gains in the quarter of $23 million.
Customer Facing Segments
Refining and Marketing
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
482 1,344 1,081 before interest and tax 3,145 1,998
205 218 220 Acquisition amortization 659 615
----------------------- -------------
Pro forma replacement cost result
687 1,562 1,301 before interest and tax 3,804 2,613
======================= =============
Results include:
- - - Asset write-downs/impairment - -
(369) - (206) Environmental and other provisions (206) (369)
Restructuring, integration and
(72) - - rationalization costs - (131)
- - - Other - -
----------------------- -------------
(441) - (206) Total non-operating items (206) (500)
(21) (18) (17) Exceptional items (175) (122)
======================= =============
Total non-operating and
(462) (18) (223) exceptional items (381) (622)
======================= =============
Refinery throughputs (mb/d)
405 404 410 UK 403 399
909 871 882 Rest of Europe 879 951
1,406 1,370 1,417 USA 1,350 1,391
366 377 296 Rest of World 358 383
----------------------- -------------
3,086 3,022 3,005 Total throughput 2,990 3,124
======================= =============
96.2 95.1 94.9 Refining availability 95.0 95.7
======================= =============
Oil sales volumes (mb/d)
Refined products
270 318 333 UK 315 276
1,293 1,344 1,313 Rest of Europe 1,327 1,323
1,828 1,724 1,758 USA 1,736 1,800
657 665 677 Rest of World 674 636
----------------------- --------------
4,048 4,051 4,081 Total marketing sales 4,052 4,035
2,647 2,087 2,624 Trading/supply sales 2,542 2,805
----------------------- --------------
6,695 6,138 6,705 Total refined product sales 6,594 6,840
5,316 5,339 3,572 Crude oil 4,672 5,175
----------------------- --------------
12,011 11,477 10,277 Total oil sales 11,266 12,015
======================= ==============
Global Indicator Refining Margin(a)
($/bbl)
2.47 5.29 4.37 NWE 4.15 2.77
5.61 9.18 6.99 USGC 7.72 5.11
6.39 9.01 5.01 Midwest 6.25 5.09
9.04 15.41 11.28 USWC 11.62 7.39
1.27 2.80 5.48 Singapore 3.92 1.63
4.59 7.89 6.20 BP Average 6.26 4.13
======================= ==============
(a) The Global Indicator Refining Margin (GIM) is the average of six
regional indicator margins weighted for BP's crude refining capacity in
each region. Each regional indicator margin is based on a single
representative crude with product yields characteristic of the typical
level of upgrading complexity. The regional indicator margins may not
be representative of the margins achieved by BP in any period because
of BP's particular refinery configurations and crude and product slate.
Customer Facing Segments
Refining and Marketing
The pro forma replacement cost result before interest and tax for the third
quarter was $1,301 million. This compares with $687 million for the same period
last year. The nine months result was $3,804 million, a year-on-year increase of
$1,191 million, or 46%.
The improvement in the result is due primarily to refining margins in the third
quarter being significantly higher than in the equivalent quarter a year ago.
The margins continued to be supported by strong product demand and the impact of
industry-wide planned and unplanned refinery maintenance. The refining result
for the quarter was stronger than that suggested by the Global Indicator Margin
(GIM) because of upgrading capacity in our refining portfolio and the benefits
from supply optimization. Marketing margins decreased relative to the previous
quarter and the equivalent quarter a year ago because rises in crude and product
prices more than offset the increase in selling prices.
Included in the result for the quarter was a non-operating charge of $206
million in relation to new, and revisions to existing, environmental and other
provisions. The equivalent charge in the third quarter of 2003 was $369 million.
In addition, in the third quarter of 2003 there was a non-operating charge of
$72 million in relation to Veba integration costs. Also included in the result
is an exceptional charge of $17 million. The corresponding quarter in 2003
contained an exceptional charge of $21 million.
The improvement in the nine months result compared with a year ago was
attributable to the stronger refining margins, with overall marketing margins
lower due to factors outlined above.
Refining throughputs for the quarter were 3,005 mb/d, some 81 mb/d lower than in
the third quarter of 2003, due principally to the disposal of BP's interests in
the Singapore Refining Company Private Limited and the closure of refining
operations at the ATAS Refinery in Mersin, south eastern Turkey. The
throughputs were similar to those in the previous quarter with the impacts
described above being offset by relatively lower turnaround activity. The
quarter's refining availability was 94.9%. Marketing sales were 4,081 mb/d, a
similar level to both the previous quarter and the equivalent quarter a year
ago.
During the quarter BP Japan and Petrolub International announced an agreement to
merge their automotive lubricant businesses and create a new company called BP
Castrol KK.
The disposal of BP's Retail and LPG Business in the Singapore retail network and
related assets was completed on 30 September.
Customer Facing Segments
Petrochemicals
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
======================= =============
Replacement cost profit
84 208 188 before interest and tax 371 527
- - - Acquisition amortization - -
----------------------- -------------
Pro forma replacement cost result
84 208 188 before interest and tax 371 527
======================= =============
Results include:
- - - Asset write-downs/impairment - -
(20) - (58) Environmental and other provisions (58) (20)
Restructuring, integration and
- - - rationalization costs - 5
(36) - - Other - (36)
----------------------- -------------
(56) - (58) Total non-operating items (58) (51)
13 6 (38) Exceptional items (186) 22
======================= =============
Total non-operating and
(43) 6 (96) exceptional items (244) (29)
======================= =============
109 129 139(b)Chemicals Indicator Margin(a)($/te) 131(b) 113
======================= =============
Petrochemicals production (kte)
771 856 728 UK 2,424 2,354
2,724 2,726 2,724 Rest of Europe 8,178 8,168
2,507 2,514 2,600 USA 7,657 7,399
1,038 1,075 1,097 Rest of World 3,304 2,869
----------------------- --------------
7,040 7,171 7,149 Total production 21,563 20,790
======================= ==============
(a) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins. It is based on market data collected
by Nexant in their quarterly market analyses, then weighted based on
BP's product portfolio. It does not cover our entire portfolio of
products, and consequently is only indicative of the margins achieved by
BP in any particular period.
(b) Provisional. The data for the third quarter is based on two months'
actuals and one month of provisional data.
Petrochemicals' pro forma replacement cost result before interest and tax for
the third quarter was $188 million, an increase of $104 million compared with
the third quarter last year as higher margins more than offset higher net
non-operating and exceptional charges. The result for the nine months was 30%
lower than a year ago reflecting higher non-operating costs and exceptional
charges. The third quarter result was down from $208 million in the second
quarter, due to higher margins and lower fixed costs being more than offset by
revisions to environmental and other provisions of $58 million and an
exceptional charge of $38 million arising from the sale of our Fabrics and
Fibres business.
Production of 7,149 thousand tonnes in the third quarter was 109 thousand tonnes
higher than the third quarter last year due primarily to higher asset
utilization. Year-to-date production was 773 thousand tonnes higher than a year
ago due to new Asian PTA capacity and higher asset utilization. Production in
the third quarter was down 22 thousand tonnes compared with the second quarter
due to UK maintenance activity, which more than offset increased volumes in
other regions.
During the quarter we have progressed with plans to consolidate the Olefins and
Derivatives (O&D) business into a stand-alone entity able to operate separately
from the BP Group. Shortly after the quarter we reached agreement to sell the
Fabrics and Fibres business, for which completion is expected during the fourth
quarter.
Customer Facing Segments
Gas, Power and Renewables
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
====================== ==============
Replacement cost profit
127 216 130 before interest and tax 544 484
- - - Acquisition amortization - -
---------------------- --------------
Pro forma replacement cost result
127 216 130 before interest and tax 544 484
====================== ==============
Results include:
- - - Asset write-downs/impairment - -
- - - Environmental and other provisions - -
Restructuring, integration and
- - - rationalization costs - -
- - - Other - -
---------------------- --------------
- - - Total non-operating items - -
(2) - 16 Exceptional items 16 4
====================== ==============
Total non-operating and
(2) - 16 exceptional items 16 4
====================== ==============
Gas sales volumes (mmcf/d)
2,174 2,495 1,893 UK 2,471 2,653
362 266 485 Rest of Europe 398 418
11,808 12,470 13,585 USA 13,228 11,328
11,133 12,070 13,250 Rest of World 13,078 11,173
---------------------- --------------
25,477 27,301 29,213 Total gas sales volumes 29,175 25,572
======================= ==============
NGL sales volumes (mb/d)
3 8 9 UK 7 3
- 3 7 Rest of Europe 4 -
346 334 358 USA 384 305
187 166 161 Rest of World 190 195
----------------------- --------------
536 511 535 Total NGL sales volumes 585 503
======================= ==============
The pro forma replacement cost result before interest and tax for the third
quarter and nine months was $130 million and $544 million, respectively,
compared with $127 million and $484 million a year ago. The increase in the
third quarter result reflects improved margins in the NGL and Solar businesses
and higher exceptional gains from the disposal of BP's interest in an NGL plant
in Canada, offset partly by weaker gas marketing and trading margins. The result
for the nine months is higher than a year ago due principally to higher
contributions from the NGL and Solar businesses and a higher exceptional gain
more than offsetting the weaker margins seen in gas marketing and trading.
During the quarter, the Tangguh LNG project (BP share 37.16%) signed a sale and
purchase agreement with K Power of South Korea to supply up to 0.8 million
tonnes of LNG per annum for 20 years starting in 2006. BP Shipping announced an
order for four new LNG carriers from Hyundai Heavy Industries of South Korea for
delivery in 2007 and 2008. Since the end of the third quarter, the Tangguh LNG
project has signed a sale and purchase agreement with Sempra Energy LNG to
supply up to 3.7 million tonnes of LNG per annum from Indonesia to markets in
Mexico and the US for 20 years, beginning in 2008.
Other Businesses and Corporate
3Q 2Q 3Q Nine Months
2003 2004 2004 $ million 2004 2003
====================== =============
Replacement cost profit (loss)
(330) (164) (424) before interest and tax 541 (649)
- - - Acquisition amortization - -
---------------------- -------------
Pro forma replacement cost result
(330) (164) (424) before interest and tax 541 (649)
====================== =============
Results include:
- - - Asset write-downs/impairment - -
(112) - (225) Environmental and other provisions (225) (112)
Restructuring, integration and
- - (19) rationalization costs (19) -
- - - Other - -
---------------------- --------------
(112) - (244) Total non-operating items (244) (112)
(14) (1) 1 Exceptional items 1,313 (20)
====================== ==============
Total non-operating
(126) (1) (243) and exceptional items 1,069 (132)
====================== ==============
Other businesses and corporate comprises Finance, the group's aluminium asset,
interest income and costs relating to corporate activities. The third quarter
result includes a charge of $225 million in respect of new, and revisions to
existing, environmental and other provisions and a charge of $19 million in
respect of the separation of the Olefins and Derivatives business. In the first
quarter, BP sold its interest in PetroChina for $1.65 billion and its interest
in Sinopec for $0.7 billion. These interests were previously included in other
businesses and corporate.
Dividends
3Q 2Q 3Q Nine Months
2003 2004 2004 2004 2003
====================== ==============
Dividends per ordinary share
6.50 7.10 7.10 cents 20.95 19.25
3.857 3.860 3.910 pence 11.577 11.843
39.0 42.6 42.6 Dividends per ADS (cents) 125.7 115.5
----------------------- --------------
BP today announced a third quarterly dividend for 2004 of 7.10 cents per
ordinary share. Holders of ordinary shares will receive 3.910 pence per share
and holders of American Depositary Receipts (ADRs) $0.426 per ADS share. The
dividend is payable on 6 December to shareholders on the register on 12
November. Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP
facility in the US Direct Access Plan will receive the dividend in the form of
shares, also on 6 December. The fourth quarter 2004 results and dividend will be
announced on 8 February 2005.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
"The world economy's expansion has continued, despite patches of softer
growth in the US and Europe. Activity in the US appears to have
strengthened in the third quarter although the recovery across the major
European economies remains below trend on average and growth in parts of
Asia, including China, appears to have moderated. Continued growth is
expected across the world economy at around trend rates.
"Oil prices averaged $41.54 per barrel (Dated Brent) in the third quarter
- over $6 per barrel higher than second quarter prices. Loss of US
production following Hurricane Ivan, along with low inventories and
limited spare capacity, propelled prices to record nominal highs in
October, averaging almost $50 per barrel to date. Price spreads between
light, sweet and heavier, sourer crudes also touched record highs
recently. The outlook for the rest of 2004 will depend upon the rate of
US production recovery after Hurricane Ivan and the strength of oil
demand growth. Medium term oil price prospects will principally depend on
the future strength of supply, demand growth, OPEC politics and
perceptions of risks to political stability in certain of those nations.
Oil prices are considered to have an approximate support level of $30 per
barrel for at least the medium term, with chances of spiking above this
level.
"US natural gas prices averaged $5.75/mmbtu (Henry Hub first of month
index) in the third quarter, despite the oil price surge, down around
$0.25/mmbtu versus the second quarter. Following a cool summer, working
gas inventories are at record highs going into the winter heating season.
However, the 12-month futures strip (NYMEX Henry Hub) is trading
currently at almost $8/mmbtu, reflecting oil price strength.
"Refining margins in the third quarter slipped from the second quarter's
record levels but remained high by historical standards. Strong demand
growth, record refinery throughputs and low aggregate OECD product
inventories continued to underpin the refining environment. Margins
began the fourth quarter strongly amid concerns over winter heating oil
supplies in Europe and lost refinery production due to Hurricane Ivan.
The premium for light crude over heavy crude has been driven to
exceptional levels, favouring upgraded refineries over less complex
sites. The refining system should adjust, but this will take time.
Marketing margins compressed in the third quarter due to increasing crude
prices, product cost volatility and competitive pressure.
"Petrochemical margins held during the third quarter as product prices
continued to strengthen, enabling the businesses to offset rapidly rising
feedstock and energy costs. Current margins appear sustainable, although
energy price volatility and foreign exchange rates are expected to
influence future margins. Demand remained robust during the quarter, with
sales volumes stable compared with the previous quarter.
"Capital expenditure, excluding acquisitions, for the nine months was
$9.8 billion, and is expected to be slightly above $14 billion for the
year. 2005 capital spending is expected to be around $14 billion, above
our previous forecast primarily due to the weak US dollar and the
assumption that recent sector specific inflationary pressure in the
market price of capital goods is sustained through 2005. The share
buyback programme is continuing, reducing the number of shares
outstanding thus increasing our ability to accelerate per share dividend
growth."
----------------------------------------------------------------------
The foregoing discussion, in particular the statements under "Outlook",
contains forward looking statements particularly those regarding BP's
asset portfolio and changes in it, capital expenditure, costs, demand,
divestments, future performance, growth and other trend projections,
impact of foreign exchange rates, maintenance, margins, prices,
production, share repurchases and the timing of projects and pending
transactions. Forward looking statements by their nature involve risks
and uncertainties and actual results may differ from those expressed in
such statements depending on a variety of factors including the
following: the timing of bringing new fields on stream; industry
product supply; demand and pricing; currency exchange rates;
operational problems; general economic conditions including
inflationary pressures; political stability and economic growth in
relevant areas of the world; changes in governmental regulations;
exchange rate fluctuations; development and use of new technology and
successful commercial relationships; the actions of competitors;
natural disasters and other changes in business conditions; prolonged
adverse weather conditions; wars and acts of terrorism or sabotage; and
other factors discussed in this Announcement. For more information you
should refer to our Annual Report and Accounts 2003 and our 2003
Annual Report on Form 20-F filed with the US Securities and Exchange
Commission.
----------------------------------------------------------------------
BP p.l.c. and Subsidiaries
Summarized Group Results
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
3,666 4,302 4,883 Exploration and Production 13,427 11,818
482 1,344 1,081 Refining and Marketing 3,145 1,998
84 208 188 Petrochemicals 371 527
127 216 130 Gas, Power and Renewables 544 484
(330) (164) (424) Other businesses and corporate 541 (649)
----------------------- --------------
Replacement cost profit before
4,029 5,906 5,858 interest and tax 18,028 14,178
84 462 1,027 Stock holding gains (losses)(Note 5) 2,137 (68)
----------------------- --------------
Historical cost profit before
4,113 6,368 6,885 interest and tax 20,165 14,110
159 145 156 Interest expense (Note 6) 453 484
139 76 79 Other finance expense (Note 7) 231 395
----------------------- --------------
3,815 6,147 6,650 Profit before taxation 19,481 13,231
1,428 2,199 2,109 Taxation (Note 8) 6,130 4,954
----------------------- --------------
2,387 3,948 4,541 Profit after taxation 13,351 8,277
43 52 58 Minority shareholders' interest 154 129
----------------------- --------------
2,344 3,896 4,483 Profit for the period 13,197 8,148
----------------------- --------------
1,438 1,536 1,530 Distribution to shareholders 4,549 4,258
======================= ==============
Earnings per ordinary share - cents
10.62 17.80 20.67 Basic 60.28 36.71
10.51 17.43 20.41 Diluted 59.18 36.51
======================= ==============
Replacement Cost Results
Historical cost profit
2,344 3,896 4,483 for the period 13,197 8,148
Stock holding (gains) losses
net of minority shareholders'
(84) (462) (1,027) interest (2,137) 68
----------------------- --------------
Replacement cost profit
2,260 3,434 3,456 for the period 11,060 8,216
----------------------- --------------
Earnings per ordinary share - cents
On replacement cost profit
10.25 15.68 15.96 for the period 50.52 37.02
======================= =============
Summarized Group Balance Sheet
30 September 31 December
2004 2003
=====================
$ million
Fixed assets
Intangible assets 12,741 13,642
Tangible assets 91,917 91,911
Investments 18,829 17,458
---------------------
123,487 123,011
---------------------
Current assets
Stocks 15,087 11,617
Debtors 39,703 33,902
Investments 245 185
Cash at bank and in hand 1,576 1,947
---------------------
56,611 47,651
Creditors - amounts falling due within one year
Finance debt 7,665 9,456
Other creditors 48,324 41,128
---------------------
Net current assets (liabilities) 622 (2,933)
---------------------
Total assets less current liabilities 124,109 120,078
Creditors - amounts falling due
after more than one year
Finance debt 12,780 12,869
Other creditors 4,475 6,090
Provisions for liabilities and charges
Deferred taxation 14,970 14,371
Other provisions 9,270 8,815
---------------------
Net assets excluding pensions and other
post-retirement benefit balances 82,614 77,933
Defined benefit pension plan surplus 1,292 1,021
Defined benefit pension plan and other
post-retirement benefit plan deficits (7,682) (7,510)
---------------------
Net assets 76,224 71,444
Minority shareholders' interest - equity 1,283 1,125
---------------------
BP shareholders' interest 74,941 70,319
=====================
Movement in BP shareholders' interest: $ million
At 31 December 2003 75,938
Prior year adjustment - change in accounting policy
(see Note 1) (5,619)
------
As restated 70,319
Profit for the period 13,197
Distribution to shareholders (4,549)
Currency translation differences (net of tax) (152)
Issue of ordinary share capital for employee share schemes 379
Issue of ordinary share capital for TNK-BP acquisition 1,250
Net purchase of shares by ESOP trusts (4)
Repurchase of ordinary share capital (5,499)
------
At 30 September 2004 74,941
======
Summarized Group Cash Flow Statement
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Net cash inflow from
4,891 6,917 6,919 operating activities (a) 21,510 18,198
----------------------- ---------------
39 7 1,061 Dividends from joint ventures 1,246 80
----------------------- ---------------
Dividends from
65 97 69 associated undertakings 197 297
----------------------- ---------------
Servicing of finance and returns
on investments
41 45 50 Interest received 136 124
(163) (154) (152) Interest paid (471) (816)
26 18 6 Dividends received 36 74
Dividends paid to
(4) (8) (15) minority shareholders (25) (17)
----------------------- ---------------
Net cash outflow from servicing of
(100) (99) (111) finance and returns on investments (324) (635)
----------------------- ---------------
Taxation
(264) (388) (299) UK corporation tax (1,009) (856)
(539) (1,231) (1,489) Overseas tax (2,978) (2,432)
----------------------- ---------------
(803) (1,619) (1,788) Tax paid (3,987) (3,288)
----------------------- ---------------
Capital expenditure and
financial investment
(3,063) (2,764) (3,251) Payments for fixed assets (8,956) (8,694)
Proceeds from the sale
874 352 537 of fixed assets 3,728 4,843
----------------------- ---------------
Net cash outflow for
capital expenditure and
(2,189) (2,412) (2,714) financial investment (5,228) (3,851)
----------------------- --------------
Acquisitions and disposals
(28) (14) - Acquisitions, net of cash acquired (14) (178)
Proceeds from the sale
- 305 37 of businesses 342 179
Net investment in
(2,625) - 23 TNK-BP joint venture (1,250) (2,625)
Net investment in
- (21) (75) other joint ventures (188) (16)
Investments in associated
(243) (148) (171) undertakings (752) (760)
----------------------- ---------------
Net cash (outflow) inflow for
(2,896) 122 (186) acquisitions and disposals (1,862) (3,400)
----------------------- ---------------
(1,433) (1,478) (1,536) Equity dividends paid (4,506) (4,216)
----------------------- ---------------
(2,426) 1,535 1,714 Net cash inflow (outflow) 7,046 3,185
======================= ===============
(1,471) 2,155 1,617 Financing (b) 7,370 3,483
76 (153) 73 Management of liquid resources 58 182
(1,031) (467) 24 (Decrease) increase in cash (382) (480)
----------------------- ---------------
(2,426) 1,535 1,714 7,046 3,185
======================= ===============
Analysis of Cash Flow
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
(a) Reconciliation of historical
cost profit before interest
and tax to net cash inflow
from operating activities
Historical cost profit before
4,113 6,368 6,885 interest and tax 20,165 14,110
2,485 2,738 2,648 Depreciation and amounts provided 8,200 7,847
Exploration expenditure
75 22 34 written off 123 168
Net operating charge for pensions
and other post-retirement
(525) (34) 39 benefits, less contributions (18) (723)
Share of profits of joint ventures
(433) (868) (1,117) and associated undertakings (2,626) (944)
(72) (74) (49) Interest and other income (187) (220)
(Profit) loss on sale of fixed
(172) 127 15 assets and businesses (1,088) (846)
583 50 630 Charge for provisions 747 641
(187) (95) (168) Utilization of provisions (418) (512)
(1,048) (1,412) (2,573) (Increase) decrease in stocks (3,738) (479)
(35) (1,400) (3,395) (Increase) decrease in debtors (6,381) (3,417)
107 1,495 3,970 Increase (decrease) in creditors 6,731 2,573
----------------------- ---------------
Net cash inflow from
4,891 6,917 6,919 operating activities 21,510 18,198
======================= ===============
(b) Financing
(1,433) (430) (717) Long-term borrowing (1,775) (2,656)
1,774 434 13 Repayments of long-term borrowing 1,283 2,784
(1,924) (111) (338) Short-term borrowing (605) (2,968)
Repayments of short-term
143 314 479 borrowing 3,201 4,430
----------------------- ---------------
(1,440) 207 (563) 2,104 1,590
Issue of ordinary share capital
(31) (96) (157) for employee share schemes (379) (112)
- 44 87 Purchase of shares by ESOP trusts 146 6
Repurchase of ordinary
- 2,000 2,250 share capital 5,499 1,999
----------------------- ---------------
Net cash outflow
(1,471) 2,155 1,617 (inflow) from financing 7,370 3,483
======================= ===============
Adjusted Operating Cash Flow
Net cash inflow from operating
4,891 6,917 6,919 activities (a) 21,510 18,198
Dividends received from
39 7 1,061 joint ventures 1,246 80
Dividends received from
65 97 69 associated undertakings 197 297
Net cash outflow from servicing
of finance and returns on
(100) (99) (111) investments (324) (635)
----------------------- ---------------
Adjusted operating cash
4,895 6,922 7,938 flow (pre-tax) 22,629 17,940
(799) (1,647) (1,821) Tax paid on operations* (4,118) (3,081)
----------------------- ---------------
Adjusted operating cash
4,096 5,275 6,117 flow (post-tax) 18,511 14,859
----------------------- ---------------
* Components of tax payments
(799) (1,647) (1,821) Tax paid on operations (4,118) (3,081)
Tax refunded/(paid) on
(4) 28 33 exceptional items (b) 131 (207)
----------------------- ---------------
(803) (1,619) (1,788) Total tax paid (3,987) (3,288)
======================= ===============
(a) Includes pre-tax discretionary pension funding of $83 million in 3Q 2004
($55 million post-tax), $249 million in nine months 2004 ($171 million
post-tax), $612 million in 3Q 2003 ($386 million post-tax) and $947 million
in nine months 2003 ($600 million post-tax).
(b) Deemed to be the tax credit/(charge) on exceptional items in the income
statement.
Capital Expenditure and Acquisitions
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
Exploration and Production
181 211 191 UK 555 597
80 45 68 Rest of Europe 161 204
989 1,027 1,035 USA 2,994 2,957
6,973 1,022 1,150 Rest of World (a) 4,862 9,017
----------------------- -------------
8,223 2,305 2,444 8,572 12,775
----------------------- -------------
Refining and Marketing
89 82 100 UK 259 228
169 173 159 Rest of Europe 424 337
322 330 291 USA 879 886
79 55 59 Rest of World 151 130
----------------------- -------------
659 640 609 1,713 1,581
----------------------- -------------
Petrochemicals
51 22 66 UK 108 81
16 53 69 Rest of Europe 160 68
55 68 72 USA 187 161
60 38 25 Rest of World 124 166
----------------------- -------------
182 181 232 579 476
----------------------- -------------
Gas, Power and Renewables
16 5 6 UK 12 48
6 3 2 Rest of Europe 7 30
18 14 14 USA 39 111
45 60 43 Rest of World 150 109
----------------------- -------------
85 82 65 208 298
----------------------- -------------
Other businesses and corporate
40 13 51 UK 66 79
- - - Rest of Europe - 1
19 13 11 USA 33 191
- - - Rest of World - 1
----------------------- -------------
59 26 62 99 272
----------------------- -------------
9,208 3,234 3,412 11,171 15,402
======================= =============
By geographical area
377 333 414 UK 1,000 1,033
271 274 298 Rest of Europe 752 640
1,403 1,452 1,423 USA 4,132 4,306
7,157 1,175 1,277 Rest of World (a) 5,287 9,423
----------------------- -------------
9,208 3,234 3,412 11,171 15,402
----------------------- -------------
(a) Nine months 2004 included $1,354 million investment in TNK's interest
in Slavneft within TNK-BP. Third quarter and nine months 2003 included
the investment in the TNK-BP joint venture.
Exchange rates
US dollar/sterling average rate
1.61 1.81 1.82 for the period 1.82 1.61
1.66 1.81 1.80 US dollar/sterling period-end rate 1.80 1.66
US dollar/euro average rate
1.13 1.20 1.22 for the period 1.23 1.11
1.15 1.21 1.23 US dollar/euro period-end rate 1.23 1.15
======================= =============
Analysis of Replacement Cost Profit
Before Interest and Tax
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
Exploration and Production
672 835 745 UK 2,403 2,743
95 206 246 Rest of Europe 615 433
1,352 1,503 1,566 USA 4,563 4,384
1,547 1,758 2,326 Rest of World 5,846 4,258
----------------------- -------------
3,666 4,302 4,883 13,427 11,818
----------------------- -------------
Refining and Marketing
(160) (195) (152) UK (536) (320)
355 444 533 Rest of Europe 1,266 1,215
92 872 536 USA 1,817 574
195 223 164 Rest of World 598 529
----------------------- -------------
482 1,344 1,081 3,145 1,998
----------------------- -------------
Petrochemicals
(132) (62) (107) UK (325) (260)
93 183 130 Rest of Europe 467 442
63 3 30 USA (76) 199
60 84 135 Rest of World 305 146
----------------------- -------------
84 208 188 371 527
----------------------- -------------
Gas, Power and Renewables
15 (2) (46) UK (36) 36
(12) (3) (9) Rest of Europe (23) (26)
78 114 139 USA 332 261
46 107 46 Rest of World 271 213
----------------------- -------------
127 216 130 544 484
----------------------- -------------
Other businesses and corporate
(108) (50) (147) UK (360) (350)
3 (1) 21 Rest of Europe 14 (7)
(237) (109) (268) USA (407) (361)
12 (4) (30) Rest of World 1,294 69
----------------------- -------------
(330) (164) (424) 541 (649)
----------------------- -------------
4,029 5,906 5,858 18,028 14,178
======================= =============
By geographical area
287 526 293 UK 1,146 1,849
534 829 921 Rest of Europe 2,339 2,057
1,348 2,383 2,003 USA 6,229 5,057
1,860 2,168 2,641 Rest of World 8,314 5,215
----------------------- -------------
4,029 5,906 5,858 18,028 14,178
======================= =============
Included above:
Share of profits of joint
303 734 942 ventures 2,161 521
128 130 165 Share of profits of associated
undertakings 436 418
----------------------- -------------
431 864 1,107 2,597 939
======================= =============
Pro Forma Result: Replacement Cost Profit Before
Interest and Tax Adjusted for Acquisition Amortization
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
Exploration and Production
704 867 775 UK 2,500 2,842
95 206 246 Rest of Europe 615 433
1,592 1,713 1,785 USA 5,206 5,140
1,568 1,772 2,338 Rest of World 5,949 4,543
----------------------- -------------
3,959 4,558 5,144 14,270 12,958
----------------------- -------------
Refining and Marketing
(50) (72) (27) UK (162) 10
355 444 533 Rest of Europe 1,266 1,215
187 967 631 USA 2,102 859
195 223 164 Rest of World 598 529
----------------------- -------------
687 1,562 1,301 3,804 2,613
----------------------- -------------
Petrochemicals
(132) (62) (107) UK (325) (260)
93 183 130 Rest of Europe 467 442
63 3 30 USA (76) 199
60 84 135 Rest of World 305 146
----------------------- -------------
84 208 188 371 527
----------------------- -------------
Gas, Power and Renewables
15 (2) (46) UK (36) 36
(12) (3) (9) Rest of Europe (23) (26)
78 114 139 USA 332 261
46 107 46 Rest of World 271 213
----------------------- -------------
127 216 130 544 484
----------------------- -------------
Other businesses and corporate
(108) (50) (147) UK (360) (350)
3 (1) 21 Rest of Europe 14 (7)
(237) (109) (268) USA (407) (361)
12 (4) (30) Rest of World 1,294 69
----------------------- -------------
(330) (164) (424) 541 (649)
----------------------- -------------
4,527 6,380 6,339 19,530 15,933
----------------------- -------------
By geographical area
429 681 448 UK 1,617 2,278
534 829 921 Rest of Europe 2,339 2,057
1,683 2,688 2,317 USA 7,157 6,098
1,881 2,182 2,653 Rest of World 8,417 5,500
----------------------- -------------
4,527 6,380 6,339 19,530 15,933
======================= =============
Analysis of Exceptional Items
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration and Production
147 (2) (3) UK (6) 724
(31) - (1) Rest of Europe (1) (31)
(21) 43 13 USA 37 (250)
101 (155) 14 Rest of World 90 519
----------------------- -------------
196 (114) 23 120 962
----------------------- -------------
Refining and Marketing
14 (58) (16) UK (110) (32)
(34) - (25) Rest of Europe (42) (62)
(3) 7 16 USA 18 (29)
2 33 8 Rest of World (41) 1
----------------------- -------------
(21) (18) (17) (175) (122)
----------------------- -------------
Petrochemicals
- 3 10 UK 6 3
- 73 (56) Rest of Europe (2) (1)
12 (70) (3) USA (199) 16
1 - 11 Rest of World 9 4
----------------------- -------------
13 6 (38) (186) 22
----------------------- -------------
Gas, Power and Renewables
- - - UK - -
- - - Rest of Europe - -
(5) - - USA - 4
3 - 16 Rest of World 16 -
----------------------- -------------
(2) - 16 16 4
----------------------- -------------
Other businesses and corporate
7 1 1 UK 1 (3)
- (1) 1 Rest of Europe - (1)
(21) - (1) USA (1) (16)
- (1) - Rest of World 1,313 -
----------------------- -------------
(14) (1) 1 1,313 (20)
----------------------- -------------
Profit (loss) on sale of fixed assets
and businesses or termination
172 (127) (15) of operations 1,088 846
(4) 28 33 Taxation credit (charge) 131 (207)
----------------------- -------------
168 (99) 18 Exceptional items after taxation 1,219 639
======================= =============
Identified Non-operating Items and UPIS
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration and Production
- - - UK - (65)
- - - Rest of Europe - -
15 (247) (77) USA (a) (390) (85)
- - (60) Rest of World (183) (5)
----------------------- -------------
15 (247) (137) (573) (155)
----------------------- -------------
Refining and Marketing
- - (9) UK (9) -
(72) - (20) Rest of Europe (20) (131)
(369) - (159) USA (159) (369)
- - (18) Rest of World (18) -
----------------------- -------------
(441) - (206) (206) (500)
----------------------- -------------
Petrochemicals
(36) - (34) UK (34) (36)
- - - Rest of Europe - -
(20) - (24) USA (24) (15)
- - - Rest of World - -
----------------------- -------------
(56) - (58) (58) (51)
----------------------- -------------
Gas, Power and Renewables
- - - UK - -
- - - Rest of Europe - -
- - - USA - -
- - - Rest of World - -
----------------------- -------------
- - - - -
----------------------- -------------
Other businesses and corporate
- - (21) UK (21) -
- - - Rest of Europe - -
(112) - (223) USA (223) (112)
- - - Rest of World - -
----------------------- -------------
(112) - (244) (244) (112)
----------------------- -------------
(594) (247) (645) Total before taxation (1,081) (818)
209 88 226 Taxation credit (charge) 380 416
----------------------- -------------
(385) (159) (419) Total after taxation (701) (402)
======================= =============
(a) Includes charges for Unrealized Profit in Stock (UPIS) of $95 million
in 3Q 2004 and $248 million in the nine months of 2004 and a credit of
$15 million in 3Q 2003 and a charge of $4 million in the nine months of
2003, which removes the upstream margin from downstream inventories.
Acquisition Amortization by Business
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration and Production
32 32 30 UK 97 99
240 210 219 USA 643 756
21 14 12 Rest of World 103 285
----------------------- -------------
293 256 261 843 1,140
----------------------- -------------
Refining and Marketing
110 123 125 UK 374 330
95 95 95 USA 285 285
----------------------- -------------
205 218 220 659 615
----------------------- -------------
498 474 481 Total acquisition amortization 1,502 1,755
======================= =============
Production and Realizations
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
Production
Crude oil (mb/d) (net of royalties)
312 321 281 UK 315 359
74 80 68 Rest of Europe 74 81
558 541 495 USA 533 578
908 1,379 1,454 Rest of World 1,398 780
----------------------- -------------
1,852 2,321 2,298 Total crude oil production 2,320 1,798
======================= =============
Natural gas liquids (mb/d) (net of royalties)
23 21 13 UK 18 24
5 5 3 Rest of Europe 4 5
141 140 134 USA 138 150
33 31 31 Rest of World 30 32
----------------------- -------------
Total natural gas
202 197 181 liquids production 190 211
======================= =============
Liquids (a)(mb/d) (net of royalties)
335 342 294 UK 333 383
79 85 71 Rest of Europe 78 86
699 681 629 USA 671 728
941 1,410 1,485 Rest of World 1,428 812
----------------------- -------------
2,054 2,518 2,479 Total liquids production 2,510 2,009
======================= =============
Natural gas (b) (mmcf/d) (net of royalties)
1,267 1,213 903 UK 1,156 1,489
98 136 110 Rest of Europe 129 111
3,005 2,790 2,685 USA 2,781 3,194
4,031 4,286 4,577 Rest of World 4,367 3,823
----------------------- -------------
8,401 8,425 8,275 Total natural gas production 8,433 8,617
======================= =============
Average realizations
Crude oil ($/bbl)
27.68 33.99 40.33 UK 34.21 28.33
28.61 35.82 39.52 USA 35.87 29.19
26.30 32.64 38.01 Rest of World 33.83 26.69
27.72 34.47 39.43 BP Average 34.93 28.25
======================= =============
Natural gas liquids ($/bbl)
22.62 28.30 34.29 UK 28.84 20.09
18.37 23.13 27.59 USA 24.31 18.15
21.76 22.17 30.63 Rest of World 25.81 21.65
19.39 23.71 28.77 BP Average 25.13 18.96
======================= =============
Liquids (a) ($/bbl)
27.34 33.64 40.06 UK 33.92 27.83
26.90 33.67 37.46 USA 33.96 27.34
25.98 31.90 37.53 Rest of World 33.30 26.35
26.79 33.27 38.29 BP Average 33.89 27.24
======================= =============
Natural gas ($/mcf)
2.69 3.59 3.60 UK 4.03 2.99
4.14 5.11 4.94 USA 4.92 4.66
2.31 2.54 2.71 Rest of World 2.64 2.51
3.08 3.68 3.66 BP Average 3.71 3.46
======================= =============
(a) Crude oil and natural gas liquids.
(b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet =
1 million barrels.
Reconciliation of Historical Cost
Profit (Loss) to Pro Forma Result
Reported Acquisition Pro forma
$ million earnings amortization result
======================================
2Q 2004
Exploration and Production 4,302 256 4,558
Refining and Marketing 1,344 218 1,562
Petrochemicals 208 - 208
Gas, Power and Renewables 216 - 216
Other businesses and corporate (164) - (164)
--------------------------------------
RC profit before interest and tax 5,906 474 6,380
Interest and other finance expense (221) - (221)
Taxation (2,199) - (2,199)
MSI (52) - (52)
--------------------------------------
RC profit 3,434 474 3,908
=================
Stock holding gains (losses) 462
-----
HC profit 3,896
=====
3Q 2003
Exploration and Production 3,666 293 3,959
Refining and Marketing 482 205 687
Petrochemicals 84 - 84
Gas, Power and Renewables 127 - 127
Other businesses and corporate (330) - (330)
--------------------------------------
RC profit before interest and tax 4,029 498 4,527
Interest and other finance expense (298) - (298)
Taxation (1,428) - (1,428)
MSI (43) - (43)
--------------------------------------
RC profit 2,260 498 2,758
=================
Stock holding gains (losses) 84
-----
HC profit 2,344
=====
Reconciliation of Historical Cost
Profit (Loss) to Pro Forma Result
Reported Acquisition Pro forma
$ million earnings amortization result
======================================
Nine Months 2004
Exploration and Production 13,427 843 14,270
Refining and Marketing 3,145 659 3,804
Petrochemicals 371 - 371
Gas, Power and Renewables 544 - 544
Other businesses and corporate 541 - 541
--------------------------------------
RC profit before interest and tax 18,028 1,502 19,530
Interest and other finance expense (684) - (684)
Taxation (6,130) - (6,130)
MSI (154) - (154)
--------------------------------------
RC profit 11,060 1,502 12,562
=================
Stock holding gains (losses) 2,137
------
HC profit 13,197
======
Nine Months 2003
Exploration and Production 11,818 1,140 12,958
Refining and Marketing 1,998 615 2,613
Petrochemicals 527 - 527
Gas, Power and Renewables 484 - 484
Other businesses and corporate (649) - (649)
--------------------------------------
RC profit before interest and tax 14,178 1,755 15,933
Interest and other finance expense (879) - (879)
Taxation (4,954) - (4,954)
MSI (129) - (129)
--------------------------------------
RC profit 8,216 1,755 9,971
=================
Stock holding gains (losses) (68)
-----
HC profit 8,148
=====
Return on Average Capital Employed
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Replacement cost basis
2,260 3,434 3,456 RC profit for the period (a) 11,060 8,216
82 62 67 Interest (b) 193 259
43 52 58 Minority shareholders' interest 154 129
----------------------- --------------
2,385 3,548 3,581 Adjusted RC profit 11,407 8,604
======================= ==============
86,886 93,928 95,289 Average capital employed 95,219 87,200
11.0% 15.1% 15.0% ROACE - replacement cost basis 16.0% 13.2%
----------------------- --------------
Pro forma basis
2,385 3,548 3,581 Adjusted RC profit (a) 11,407 8,604
498 474 481 Acquisition amortization 1,502 1,755
----------------------- --------------
Adjusted RC profit -
2,883 4,022 4,062 pro forma basis 12,909 10,359
======================= ==============
86,886 93,928 95,289 Average capital employed 95,219 87,200
Average capital employed
14,110 12,689 12,156 acquisition adjustment 12,614 15,211
----------------------- --------------
Average capital employed
72,776 81,239 83,133 (pro forma basis) 82,605 71,989
15.8% 19.8% 19.5% ROACE - Pro forma basis 20.8% 19.2%
----------------------- -------------
Historical cost basis
2,344 3,896 4,483 Profit for the period (a) 13,197 8,148
82 62 67 Interest (b) 193 259
43 52 58 Minority shareholders' interest 154 129
----------------------- --------------
2,469 4,010 4,608 Adjusted historical cost profit 13,544 8,536
======================= ==============
86,886 93,928 95,289 Average capital employed 95,219 87,200
11.4% 17.1% 19.3% ROACE - historical cost basis 19.0% 13.1%
(a) 3Q 2004 includes $18 million in respect of exceptional items and $(419)
million in respect of non-operating items and UPIS. Nine months 2004
includes $1,219 million in respect of exceptional items and $(701)
million in respect of non-operating items and UPIS. 3Q 2003 includes
$168 million in respect of exceptional items and $(385) million in
respect of non-operating items and UPIS. Nine months 2003 includes $639
million in respect of exceptional items and $(402) million in respect
of non-operating items and UPIS.
(b) Excludes interest on joint venture and associated undertakings' debt
and is on a post-tax basis using a deemed tax rate equal to the US
statutory tax rate.
Pre-Tax Cash Returns
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Replacement cost profit before
4,029 5,906 5,858 interest and tax 18,028 14,178
(172) 127 15 Exceptional items (1,088) (846)
----------------------- --------------
3,857 6,033 5,873 Replacement cost operating profit 16,940 13,332
498 474 481 Acquisition amortization 1,502 1,755
----------------------- --------------
Pro forma replacement cost
4,355 6,507 6,354 operating profit 18,442 15,087
609 160 550 Non-operating items 833 814
Pro forma DD&A, adjusted for non-
1,987 2,104 2,160 cash non-operating items 6,408 6,043
----------------------- --------------
6,951 8,771 9,064 Cash returns numerator 25,683 21,944
======================= ==============
88,106 93,908 96,669 Capital employed 96,669 88,106
Liabilities for current and
16,149 17,461 17,531 deferred taxation 17,531 16,149
----------------------- --------------
104,255 111,369 114,200 Operating capital employed 114,200 104,255
(13,751)(12,447)(11,865) Acquisition adjustment (11,865)(13,751)
----------------------- --------------
90,504 98,922 102,335 Cash returns denominator 102,335 90,504
======================= ==============
88,626 98,573 100,629 Average cash returns denominator 99,405 87,169
======================= ==============
31% 36% 36% Cash return 34% 34%
Net Debt Ratio - Net Debt: Net Debt + Equity
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
19,970 19,858 20,445 Gross debt 20,445 19,970
1,495 1,703 1,821 Cash and current asset investments 1,821 1,495
----------------------- --------------
18,475 18,155 18,624 Net debt 18,624 18,475
======================= ==============
68,136 74,124 76,224 Equity 76,224 68,136
21% 20% 20% Net debt ratio 20% 21%
----------------------- --------------
13,751 12,447 11,865 Acquisition adjustment 11,865 13,751
----------------------- --------------
25% 23% 22% Net debt ratio - pro forma basis 22% 25%
======================= ==============
Notes
1. Restatement of comparative information
Comparative information for 2003 has been restated to reflect the
changes described below.
(a) Transfer of natural gas liquids activities
With effect from 1 January 2004 natural gas liquids (NGLs)
activities have been transferred from the Exploration and
Production segment to Gas, Power and Renewables.
(b) New accounting standard for pensions and other post-retirement
benefits
With effect from 1 January 2004 BP has adopted Financial Reporting
Standard No. 17 'Retirement Benefits' (FRS 17). FRS 17 requires
that financial statements reflect at fair value the assets and
liabilities arising from an employer's retirement benefit
obligations and any related funding. The operating costs of
providing retirement benefits are recognized in the period in which
they are earned together with any related finance costs and changes
in the value of related assets and liabilities. This contrasts
with Statement of Standard Accounting Practice No. 24 'Accounting
for Pension Costs', which requires the cost of providing pensions
to be recognized on a systematic and rational basis over the period
during which the employer benefits from the employee's services.
The difference between the amount charged in the income statement
and the amount paid as contributions into the pension fund is shown
as a prepayment or provision on the balance sheet.
(c) Accounting for Employee Share Ownership Plans
With effect from 1 January 2004 BP has adopted Urgent Issues Task
Force Abstract No. 38 'Accounting for ESOP Trusts'. This abstract
requires that BP shares held by the group for the purposes of
Employee Share Ownership Plans (ESOPs) are deducted from equity on
the balance sheet. Such shares were previously classified as fixed
asset investments.
Balance sheet at 31 December 2003 Restated Reported
====================
$ million
Fixed assets
Intangible assets 13,642 13,642
Tangible assets 91,911 91,911
Investments 17,458 17,554
--------------------
123,011 123,107
--------------------
Current assets 47,651 54,465
Creditors - amounts falling due within one year 50,584 50,584
-------------------
Net current assets (liabilities) (2,933) 3,881
-------------------
Total assets less current liabilities 120,078 126,988
Creditors - amounts falling due after
more than one year 18,959 18,959
Provisions for liabilities and charges
Deferred taxation 14,371 15,273
Other provisions 8,815 15,693
-------------------
Net assets excluding pension and other
post-retirement benefit balances 77,933 77,063
Defined benefit pension plan surplus 1,021 -
Defined benefit pension plan and other
post-retirement benefit plan deficits (7,510) -
-------------------
Net assets 71,444 77,063
Minority shareholders' interest 1,125 1,125
-------------------
BP shareholders' interest 70,319 75,938
===================
Notes
Income statements Restated Reported
Third Nine Third Nine
Quarter Months Quarter Months
2003 2003 2003 2003
================ ================
$ million
Exploration and Production 3,666 11,818 3,716 11,961
Refining and Marketing 482 1,998 434 1,853
Petrochemicals 84 527 94 555
Gas, Power and Renewables 127 484 96 399
Other businesses and corporate (330) (649) (324) (629)
-----------------------------------
Replacement cost profit before
interest and tax 4,029 14,178 4,016 14,139
Stock holding gains (losses) 84 (68) 84 (68)
-----------------------------------
Historical cost profit before
interest and tax 4,113 14,110 4,100 14,071
Interest expense 159 484 213 624
Other finance expense 139 395 - -
-----------------------------------
Profit before taxation 3,815 13,231 3,887 13,447
Taxation 1,428 4,954 1,450 5,023
-----------------------------------
Profit after taxation 2,387 8,277 2,437 8,424
Minority shareholders' interest 43 129 43 129
-----------------------------------
Profit for the period 2,344 8,148 2,394 8,295
===================================
Distribution to shareholders 1,438 4,258 1,438 4,258
-----------------------------------
Earnings per ordinary share - cents
Basic 10.62 36.71 10.85 37.37
Diluted 10.51 36.51 10.74 37.18
===================================
Notes
2. Turnover
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
By business
7,153 8,213 8,660 Exploration and Production 25,039 23,303
38,205 45,467 45,359 Refining and Marketing 132,520 112,574
3,946 4,805 5,412 Petrochemicals 14,727 12,264
15,948 18,434 20,443 Gas, Power and Renewables 59,852 48,938
Other businesses
138 132 137 and corporate 390 378
----------------------- ---------------
65,390 77,051 80,011 232,528 197,457
Less: sales between
7,140 7,960 9,126 businesses 24,950 22,750
----------------------- ---------------
58,250 69,091 70,885 Group excluding JVs 207,578 174,707
Share of sales by
914 2,063 2,967 joint ventures 6,908 1,676
----------------------- ---------------
59,164 71,154 73,852 214,486 176,383
======================= ===============
By geographical area
Group excluding JVs
12,561 17,355 21,848 UK 56,499 40,854
12,476 13,332 13,876 Rest of Europe 39,249 38,294
29,119 33,541 31,435 USA 96,779 82,563
12,766 15,787 16,731 Rest of World 48,335 38,604
----------------------- ---------------
66,922 80,015 83,890 240,862 200,315
8,672 10,924 13,005 Less: sales between areas 33,284 25,608
----------------------- ---------------
58,250 69,091 70,885 207,578 174,707
======================= ===============
3. Replacement cost profit
Replacement cost profits reflect the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from the
historical cost profit stock holding gains and losses.
Notes
4. Operating profits are after charging:
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Exploration expense
11 3 4 UK 9 16
23 6 7 Rest of Europe 15 32
60 63 58 USA 218 144
42 36 66 Rest of World 137 157
----------------------- --------------
136 108 135 379 349
======================= ==============
Production taxes (a)
65 46 51 UK petroleum revenue tax 223 256
351 378 502 Overseas production taxes 1,279 1,046
----------------------- --------------
416 424 553 1,502 1,302
======================= ==============
(a) Production taxes are charged against Exploration and Production's
operating profit and are not included in the charge for taxation in
Note 8.
5. Stock holding gains (losses)
- - 5 Exploration and Production 13 3
89 428 866 Refining and Marketing 1,823 (64)
2 40 129 Petrochemicals 290 45
(7) (6) 27 Gas, Power and Renewables 11 (52)
---------------------- --------------
84 462 1,027 2,137 (68)
====================== ==============
Notes
6. Interest expense
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
178 147 160 Group interest payable 456 528
(53) (52) (57) Capitalized (159) (130)
----------------------- --------------
125 95 103 297 398
23 39 41 Joint ventures 121 53
11 11 12 Associated undertakings 35 33
----------------------- --------------
159 145 156 453 484
======================= ==============
7. Other finance expense
Interest on pension and other
post-retirement benefit
460 491 502 plan liabilities 1,493 1,380
Expected return on pension
and other post-retirement
(375) (491) (493) benefit plan assets (1,482) (1,125)
----------------------- --------------
Interest net of expected return
85 - 9 on plan assets 11 255
Unwinding of discount
45 50 48 on provisions 146 131
Unwinding of discount on
deferred consideration for
acquisition of investment
9 26 22 in TNK-BP 74 9
----------------------- --------------
139 76 79 231 395
======================= ==============
8. Charge for taxation
1,528 2,165 1,672 Current 5,543 4,515
(100) 34 437 Deferred 587 439
----------------------- --------------
1,428 2,199 2,109 6,130 4,954
======================= ==============
245 366 601 UK 1,312 1,075
1,183 1,833 1,508 Overseas 4,818 3,879
----------------------- --------------
1,428 2,199 2,109 6,130 4,954
======================= ==============
Notes
9. Analysis of changes in net debt
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
$ million $ million
Opening balance
18,594 19,937 19,858 Finance debt 22,325 22,008
2,115 2,006 1,531 Less: Cash 1,947 1,520
329 328 172 Current asset investments 185 215
----------------------- ---------------
16,150 17,603 18,155 Opening net debt 20,193 20,273
----------------------- ---------------
Closing balance
19,970 19,858 20,445 Finance debt 20,445 19,970
1,091 1,531 1,576 Less: Cash 1,576 1,091
404 172 245 Current asset investments 245 404
----------------------- ---------------
18,475 18,155 18,624 Closing net debt 18,624 18,475
----------------------- ---------------
Decrease (increase)
(2,325) (552) (469) in net debt 1,569 1,798
======================= ===============
Movement in cash/
(1,031) (467) 24 bank overdrafts (382) (480)
(Decrease) increase in
76 (153) 73 current asset investments 58 182
Net cash outflow (inflow)
from financing(excluding
(1,440) 207 (563) share capital) 2,104 1,590
93 - - Debt transferred to TNK-BP - 93
Exchange of Exchangeable Bonds
for Lukoil American
- - - Depositary Shares - 420
(31) 7 10 Other movements 31 139
(12) - - Debt acquired - (12)
----------------------- --------------
Movement in net debt before
(2,345) (406) (456) exchange effects 1,811 1,932
20 (146) (13) Exchange adjustments (242) (134)
----------------------- --------------
Decrease (increase)
(2,325) (552) (469) in net debt 1,569 1,798
======================= ==============
Notes
10. TNK-BP Operational and Financial Information
29 Aug Second Third Nine 29 Aug
30 Sept Quarter Quarter Months 30 Sept
2003 2004 2004 2004 2003
======================= ==============
Production (Net of royalties)
(BP share)
654 814 858 Crude oil (mb/d) 813 654
239 450 505 Natural gas (mmcf/d) 446 239
695 891 945 Total hydrocarbons (mboe/d)(a) 889 695
======================= ==============
$ million $ million
Income statement (BP share)
Replacement cost profit
158 581 807 before interest and tax 1,762 158
- - - Stock holding gains (losses) - -
(13) (26) (23) Interest expense ++ (79) (13)
(30) (171) (257) Taxation (543) (30)
(1) (10) (6) Minority shareholders' interest (26) (1)
----------------------- --------------
114 374 521 Net Income 1,114 114
======================= ==============
++ Excludes unwinding of discount
9 26 22 on deferred consideration 74 9
======================= ==============
Cash Flow
Additional investment in
- - - TNK-BP joint venture (1,416) -
Dividends related to period
- - 23 prior to acquisition 166 -
----------------------- --------------
Net investment in TNK-BP
- - 23 joint venture (1,250) -
======================= ==============
- - 1,031 Dividends received 1,150 -
======================= ==============
Third Second Third
Quarter Quarter Quarter Nine Months
2003 2004 2004 2004 2003
======================= ==============
Average oil marker prices ($/bbl)
27.20 32.32 37.23 Urals (NWE - cif) 32.85 26.97
27.20 32.60 37.41 Urals (Med - cif) 33.00 27.04
16.08 19.71 23.33 Domestic Oil 20.04 9.67
======================= ==============
Balance Sheet 30 September 31 December
2004 2003
======== ============
$ million
Fixed assets - investments
Gross assets 12,018 10,339
Gross liabilities (3,650) (3,290)
-------- --------
8,368 7,049
======== ========
Deferred consideration
Due within one year 1,219 1,227
Due after more than one year 1,185 2,352
-------- --------
2,404 3,579
======== ========
(a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1
million barrels.
BP's share of the result of the TNK-BP joint venture has been included
within Exploration and Production with effect from 29 August 2003. TNK-BP
operational and financial information has been estimated and includes
adjustments to net income in respect of prior periods amounting to a credit
of $25 million in 3Q 2004 and charges of $36 million in the nine months of
2004.
Notes
11. Statutory accounts
The financial information shown in this publication is unaudited and
does not constitute statutory accounts. The 2003 Annual Report and
Accounts have been delivered to the UK Registrar of Companies; the
report of the auditors on those accounts was unqualified.
Contacts
London New York
------------------- ----------------
Press Office Roddy Kennedy Ian Stewart
+44 (0)20 7496 4624 +1 212 451 8026
Investor Relations Fergus McLeod Rachael MacLean
+44 (0)20 7496 4717 +1 212 451 8072
http://www.bp.com/investors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BP p.l.c.
(Registrant)
Dated: 26 October 2004 /s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary